1. Field of the Invention
The present invention relates to a secure check processing system and method for lessening the possibility of check fraud committed against banks. In particular, the present invention relates to a secure check processing system and method that utilizes a central processing or transaction center.
2. Description of the Related Art
Fraudulent banking transactions are a continual and costly problem for banks, and one which they always try to combat One fraudulent banking transaction involves a scheme whereby counterfeit checks, written on the same account, are cashed at several branches of the same bank, or at different banks, at substantially the same time. The account on which each check is written has sufficient funds to cover only one of these checks.
Each of the counterfeit checks is cashed by the respective branch at which it is presented, because the computer at each respective branch indicates sufficient funds in the account for the particular check being cashed. Once all of the checks have cleared a few days later, the bank has losses for the total of all but one of the checks. For large banks, this type of fraud may amount to losses in the range of several millions of dollars per year, or perhaps more.
One conventional system, described in U.S. Pat. No. 4,747,050, issued to Bruno Brachtl et al., discloses the use of intelligent secure bank cards, which store a personal key and an account number for each user, and in which the user enters a personal identification number (PIN) that is not stored in the secure bank card, to enable an electronic funds transfer. However, such a system requires that the users remember their PINs, as well as requiring the users to have their secure bank card with them whenever a bank transfer is required. It would not prevent payees from cashing checks drawn on the payor's account.
Another conventional system, described in U.S. Pat. No. 4,109,238, issued to Robert Creekmore, involves the use of a positive check verification system. The check verification system includes a remote-located transaction processor, which communicates with a number of local point-of-use terminals. The transaction processor includes a file of customers who are entitled to verify checks. Each check verifier has an identification card containing a unique number for each customer, and a personal customer code, which is not on the card, is also provided for manual entry into an input terminal by the customer. Check verification is then established, without the need to know the account balance of a particular account being drawn against. However, such a system has a drawback in that the check verifier must respond to a check request before the check can be verified at a point-of-use terminal, as well as requiring the customers to have the identification card with them when a bank transfer is being made. Also, such a system may not effectively counteract the fraudulent check cashing scheme described above.